Get a grip on boards, Cable tells shareholders

Published on 02/07/2012 00:00

Business Secretary Vince Cable has urged shareholders in British banks to “get a stronger grip” on the boards and executives responsible for “systemic abuse”.

He said no-one at Barclays was prepared to take responsibility for the rate-rigging scandal and shareholders ought to take action.

Ministers have announced an independent review into the inter-bank lending rate in the wake of revelations that it was rigged by Barclays and other financial institutions.

Mr Cable said: “Regulators are a backstop: they don’t own banks. The governance at the top of our leading banks has been shown to be lamentably weak. No-one at the top of Barclays will take responsibility for systemic abuse.”

He added: “Shareholders, the owners, have a major responsibility here. I am bringing in legislation to strengthen their control over pay and bonuses, through binding votes, but shareholders have to get a stronger grip on weak boards and out-of-control executives.”

The government said the independent review will consider the future operation of the Libor and the possibility of introducing criminal sanctions for its manipulation.

However, Labour leader Ed Miliband insisted the public would not accept anything less than a full-scale independent inquiry into the culture and practices of banking.

His call came after the Financial Services Authority uncovered “serious failings” in the sale of complex financial products to small businesses, just days after the rate-rigging affair emerged at Barclays.

Taxpayer-backed Royal Bank of Scotland has also confirmed it is being investigated for manipulating the rates at which banks lend to each other.

Prime Minister David Cameron said the government would ensure “the criminal law can go wherever it needs to”.

Asked about calls for a wide-ranging inquiry, he said: “Let’s take our time, think this through carefully… That’s what I’m determined to do, and that’s what we will do.”

But Mr Miliband said the Prime Minister was “out of touch” and warned voters would not accept “the establishment closing ranks”.